Stamp prices to rise amid losses for Australia Post

Stamp prices are set to rise after Australia Post lost $187 million on traditional mail services.

Australia Post says the number of letters delivered dropped by 263 million to 4.5 billion in the past year.

An Australia Post spokeswoman said it costs more than 60 cents to deliver a letter, which contributed to the price hike.

"The current price of 60 cents to send a letter anywhere in Australia is not an accurate reflection of the true cost for it to be delivered, nor in keeping with inflation," the spokeswoman said.

"Losses in the letter business are expected to increase and we will continue to address ways of limiting the losses. An increase in the basic postage rate would naturally be part of this plan as we look to secure a future for our letters business, while ensuring we maintain all our Community Service Obligations (CSOs)."

Australia Post has delivered the federal government a $244 million dividend in 2012/13, but warns a decline in regular mail bodes badly for the business.

The postal agency's $312 million after-tax profit, up 10.9 per cent on 2011/12, came via strong growth in online shopping, the purchase of the StarTrack parcels service and cuts to running costs.

Chief executive Ahmed Fahour said the volume drop and the absence of a price rise for stamps during the year led to the regulated mail business losing $218.4 million in the past financial year.